Trump's Jacked-Up USPS Rates Could Cost Amazon $1.3B More on $13.3B In U.S. Shipping Costs

If President Trump gets his way, Amazon will soon be paying more to ship parcels. $1.3 billion more, to be exact. That amount that would reduce the company's profits by 1.4%.

"Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?" Trump tweeted in December last year. "Should be charging MUCH MORE!"

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Now the analysts at Citi Research have calculated what an increase might cost Amazon.

"In 2017, Amazon’s total worldwide shipping expenditure was $21.7B ... and we estimate that that will rise 33% to $28.9B this year," Citi says. "64% of that will be in the U.S., and 72% of that will be related to outbound shipping."

Boil it all down, and Citi estimates that $13.3B in Amazon shipping will be affected. That's 9% of Amazon's cost of goods sold in 2018.

In the worst-case scenario -- a 10.7% increase in shipping costs -- Amazon's costs would go up $1.3 billion. The problem isn't only that Amazon would face increased pricing from USPS. Instead, analysts speculate that the USPS boosting shipping prices could cause other shippers to follow suit.

Add it all up, and Amazon would pay more.

President Trump has ordered a 120-day review of USPS pricing, so we should know what will happen by July or August of this year. Any increases would have a negative effect on Amazon profitability.

I forecast and analyze trends affecting the mobile ecosystem. I've been a journalist, analyst, and corporate executive, and have chronicled the rise of the mobile economy. I built the VB Insight research team at VentureBeat and managed teams creating software for partners l...